Imogen BennettFrom 6 April 2026 — the first day of the new UK tax year — Making Tax Digital for Income Tax became mandatory for self-employed people and landlords earning more than £50,000 a year. HMRC has been trending heavily this week as an estimated 864,000 sole traders and landlords face new digital record-keeping obligations many were not fully prepared for. Here is what is changing, who is affected, and what to do if you have not yet acted.
What Is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax (MTD for IT) is HMRC's programme to modernise the UK's tax reporting system. Rather than filing a single self-assessment tax return once a year, affected taxpayers must now:
- Keep digital records of income and expenses using HMRC-compatible software
- Submit quarterly updates to HMRC throughout the year
- File an end-of-period statement and final declaration at the close of each tax year
The aim, according to HMRC, is to reduce errors, improve tax accuracy, and give taxpayers a clearer picture of their liabilities in real time. Critics have pointed out the increased administrative burden on small business owners and landlords who previously managed their affairs with a spreadsheet and an annual accountant visit.
The April 6 deadline marks the hard start for the first wave of mandation. HMRC announced on 5 February 2026 that it was writing to all 864,000 in-scope taxpayers, and the agency has confirmed it will not penalise late quarterly updates in the first year (2026/27) as a grace period — but the obligation to use compliant software and submit updates is real from now.
Who Is Affected Right Now
You are in scope for MTD from 6 April 2026 if your combined gross income from self-employment and property exceeds £50,000 in the 2024/25 tax year. This threshold will drop to £30,000 from April 2027, drawing in hundreds of thousands of additional taxpayers.
If your income is below £50,000 but above £30,000, you have until April 2027 to prepare. If it is below £30,000, there is no current mandation date — though voluntary sign-up is possible.
Partners in business partnerships are also affected if their share of partnership income takes their total past the threshold. Landlords with multiple properties that collectively generate more than £50,000 gross are similarly in scope, regardless of whether that income comes from a single large property or several smaller ones.
What Has Also Changed From 6 April 2026
MTD is the headline story, but it is not the only tax change that took effect this week. Several other significant changes came into force on 6 April 2026 that self-employed people, investors, and property owners should be aware of:
Dividend tax rates increased by 2 percentage points across all bands. The basic rate has risen from 8.75% to 10.75%; the higher rate from 33.75% to 35.75%; and the additional rate from 39.35% to 41.35%. For anyone who draws income from company dividends — including owner-managed business directors — this is a meaningful increase in the tax cost of that income.
Agricultural Property Relief and Business Property Relief are now capped. The combined allowance per individual is £2.5 million. Assets above this threshold receive only 50% relief rather than 100%. For farming families and business owners who rely on these reliefs in their inheritance tax planning, this is a significant change that warrants immediate review of existing estate plans.
Home working tax relief has changed. Self-employed individuals can no longer claim home working expenses as a deduction against income tax in the same way as before. Employers, however, can still reimburse employees up to £6 per week tax-free for working from home costs.
What You Should Do Now
If you are affected by MTD and have not yet registered or set up compliant software, the priority actions are clear.
Choose and set up MTD-compatible software. HMRC maintains a list of approved software providers on GOV.UK. Options range from full-featured accounting platforms like QuickBooks, Xero, and Sage to simpler bridging tools. If you are unsure which option suits your needs, your accountant can advise — or an independent financial or tax adviser through ExpertZoom can help you compare options.
Sign up for MTD with HMRC. You need to sign up your business through GOV.UK before you can submit MTD updates. The sign-up link is available at https://www.gov.uk/guidance/sign-up-your-business-for-making-tax-digital-for-income-tax. Note: once you sign up, you must use MTD — you cannot revert to paper self-assessment.
Understand the quarterly update schedule. Updates are due within one month of the end of each quarter. The quarterly periods align with the tax year: April 6 to July 5, July 6 to October 5, October 6 to January 5, and January 6 to April 5. Missing updates during the grace period (2026/27) will not trigger penalties, but building the habit now is advisable.
Review your dividend and inheritance tax position. The changes to dividend tax rates and APR/BPR reliefs are not soft changes — they are live from today. If you draw dividends from a limited company, a review of your remuneration structure with a tax adviser could identify whether a different approach is more efficient under the new rates. If you own agricultural or business property and have existing inheritance tax planning in place, your solicitor or financial adviser should review whether that planning still achieves what you intend.
Why Expert Advice Matters More Than Ever
The cumulative weight of the changes taking effect from 6 April 2026 — MTD mandation, dividend tax increases, and APR/BPR caps — means that advice which was correct last year may no longer be optimal today.
For many self-employed people and landlords, this is the moment to move from a reactive approach to tax (file once a year, sort it out in January) to a more active one. Quarterly reporting under MTD creates natural checkpoints for reviewing income, expenses, and tax planning — but only if you have the right tools and support in place.
A financial adviser or tax specialist can help you:
- Navigate the MTD software setup and ensure your records meet HMRC's requirements
- Model the after-tax impact of the new dividend rates on your income structure
- Review your estate planning in light of the APR/BPR changes
- Identify allowances and reliefs that reduce your overall tax burden legally and efficiently
The MTD transition is an administrative challenge — but handled well, with the right professional support, it is also an opportunity to gain clearer, more timely visibility of your financial position throughout the year.
Disclaimer: This article provides general information about UK tax changes and does not constitute financial or tax advice. For advice specific to your circumstances, consult a qualified financial adviser or tax specialist. Official HMRC guidance is available at GOV.UK Making Tax Digital.
